Money for Nothing

Everybody knows you need to work for your money. And if somebody just gives you money, that can only be by the expropriation of somebody else’s labor. Money just doesn’t grow on trees, after all.

But is this really true? Just because you work for your money, did the guy who paid you also work for it? What about the guy who paid him? If you follow the money trail long enough, you are going to find someone who did not work for his money. He simply got it for nothing. He did not even have to go to the trouble of picking it off trees. He just created it out of thin air by bookkeeping. We call this man a banker.

Unlike people who have to produce things of real value before they count them up and enter the number in a book, the banker creates his product simply by bookkeeping operations. The whole panoply of bank services—checking accounts, savings accounts, free toasters, checks with baby ducklings or golden retrievers printed on them—are, arguably, props to disguise the fact that the core of banking is the sheer creation of money out of nothing.

When I was a boy, one of the banks in my hometown gave out free piggy banks to children. Today, that seems a master-stroke of propaganda, fostering the impression that real banks, just like piggy banks, can only give out money that they take in. But banks are not required to keep your deposits on hand. They loan them out. Every dollar in your checking or savings account is loaned out ten times over. This is how bankers simply create money through bookkeeping. And that is just the beginning of how bankers create money. And bankers can do it even if they do not operate in buildings with Grecian columns out front and teller windows inside, even if they do not have checking and savings accounts and all the other props we associate with banking.

But even though the money you borrow was created for nothing, you still have to pay it back, with interest. And when you pay it back, you can’t just create the money. You have to work for it. You have to provide real goods and services. Thus bankers, by loaning out the money they create for nothing, gain a mortgage on future production of real world goods and services.

What is money anyway? Money is a medium of exchange that allows one to covert the fruits of one’s labor into easily portable tokens that one can exchange for the fruits of other people’s labor. What one chooses for tokens does not really matter. Money can be bits of shiny metal, colorful slips of paper, electronic data in computers, or cowrie shells, just as long as they are accepted by the butcher, the baker, and the candlestick maker.

Money does not need to have any intrinsic value. In fact, it helps if its intrinsic value is next to nothing, otherwise people will hoard it rather than circulate it freely, which would cause an economic hardship known as deflation, in which money is a commodity whose value rises because its supply diminishes. (When money is a commodity whose supply rises and its value decreases, that is called inflation. It is worth asking: Can one avoid both evils if money has no value in itself, i.e., if it is not a commodity that can be bought and sold alongside bricks and butter?)

If the best money has no intrinsic value, then the worst sort of money would be precious metals. The best sort of money would be entirely intangible, just data in a computer. Even paper money can be hoarded, for instance, when the price of toilet paper gets too high. (Perhaps the best way to ensure that money is not hoarded is simply to print an expiration date on it.)

Ideally money should be a self-effacing servant of the real economy, which produces actual goods and services. But money has grown into a jealous tyrant that interferes with the real economy. The simplest example is your average economic crisis. In an economic depression, the land does not suddenly go sterile. The udders of cows do not go dry. Men do not suddenly become stupid and lazy. The sun keeps shining; the crops keep growing; the chickens keep laying; people keep working. Goods pile up in warehouses and stores. And on the demand side, people still need to eat. But silos are bursting and people are starving because, for some mysterious reason, there is suddenly “not enough money.”

People have no money to spend, or they are afraid to part with the money they do have, because of a climate of uncertainty. After all, half way around the world, a massive swindle has been discovered; a bank has collapsed; a speculative bubble has burst. So, naturally, back in Hooterville, stores are filled with sour milk and rotting vegetables and children are going to bed hungry.

If an able-bodied man were shipwrecked on a fertile island, he would not starve for lack of money. But on this vast and fertile island we call Earth, people starve amidst plenty because we have accepted the dominion of a monetary economy that disrupts the real economy. That is no way to run a planet.

The obvious solution is simply to increase the money supply. One must make consumer demand effective so the market clears and life can go on. And the simplest way to do that is for the government to print money and give it to people. Remember George W. Bush’s 2008 “stimulus checks”? That was money for nothing, handed to people to stimulate economic activity. The effect, of course, was negligible. But it was morally and economically far preferable to the massive “bailouts” and the Obama stimulus plan that followed.

Whereas the Bush stimulus checks went directly to millions of consumers, who injected the money directly into the economy when they purchased goods and services, the bailouts and stimulus spending went to a relative handful of politically connected insiders. It turns out, furthermore, that very little of the money went to stimulate the US economy. Instead, a lot of it was invested overseas. Other recipients of bailouts held onto their cash, hoping that they could buy up real assets for cheap if the economy continued to slide deeper into depression. Moreover, whatever money did go into the US economy came with strings attached: the necessity to repay principal and interest. At least with the Bush stimulus checks, the money went directly into the economy with no strings attached in straight up purchases of goods and services.

But, as we have seen, money for nothing is not merely part of an occasional emergency stimulus measure. It is business as usual for banks.

But if money is being created out of nothing all the time, then we have to ask: Should this be left to the banks, or is there a better way of doing it?

Why not simply have the government create money and send each individual a monthly check, to be spent as he sees fit? This money would stimulate the economy directly, through the purchases of goods and services, whereas money created by banks in the form of loans must be paid back, with interest, creating a parasitic class of people who get a share of real production by loaning at interest a commodity they get for nothing.

Again, every industry that produces real goods and services has accounting and inventory costs, but actual production has to come first. You have to make toys before you can count them. With banks, money is by created simply by bookkeeping operations, e.g., making loans. Bankers “produce” merely by juggling numbers.

But if money for nothing is simply a feature of the modern economy, why not cut out the parasitic “private sector” middlemen and simply have the government create money and distribute it directly to consumers?

Why is the government preferable to the private sector as the creator of money? Because, unlike private businesses, the government is accountable to the public. Its purpose is to secure the common good. Moreover, when the private financial sector is in crisis, the bankers look to the government to bail them out—at the expense of the taxpayers. Time for the government to bail the people out—at the expense of the banks. Let’s repudiate all our debts and start fresh with a new financial system.

“But simply creating money and mailing out checks would be inflationary!” some would object. True. But it would be no more inflationary than allowing banks to create money.

Furthermore, there is a deeper issue here: Is inflation or deflation simply a product of the commodification of money? The commodification of money means that money is not merely a tool of exchange, but a commodity that is exchanged, a commodity with a cost of its own (interest). Would it be possible to decommodify money, i.e., to eliminate interest and a secondary market in money, either partially or altogether? Would the creation of money that expires after a while cut down on the commodification of money?

“But money for nothing would be socialism!” others would object. Yes, I am proposing socializing the creation and initial distribution of money. But what people do with the money at that point is their own business. The system I propose is completely consistent with private property and private enterprise. Indeed, it would strengthen and secure them, because it would eliminate a parasitic class of people who steadily mulct the real economy, and occasionally send it into crises, by creating and loaning out money that is free to them and should be free to all.

“But how would businesses capitalize themselves without bank loans?” That is a fair question. Perhaps the best answer is to say that that just as individual consumers could get money for nothing from the state, creditable producers could do so as well. But nothing about my proposal would prevent banks and credit unions from forming to capitalize businesses. But they would not be allowed to create money out of thin air. They would have to attract savings by paying interest, then loan out their deposits—and no more than their deposits—at interest to creditworthy businessmen. To do this, banks would have to offer serious interest for savings and charge serious interest on loans, but it could be done. It would definitely be “tight” money, though, which might be a good thing in the long run, since it would discourage speculative investments. Of course if money went bad after a while, it would make no sense to save it. But none of this might be necessary if interest-free state financing is a viable option. It is certainly a question worth exploring.

“But shouldn’t people work for their money?” Yes and no. Money needs to get into circulation. And the modern welfare state gives people money for nothing all the time in the form of unemployment insurance, old age pensions, welfare payments, food aid, healthcare, etc. Why not bundle all these benefits together into a single, flat monthly payment? These payments would be enough to ensure the basic social safety net we all have anyway. It would also be fairer than the present system, which expropriates the fruits of some people’s labor to redistribute them to others. It would, in effect, be welfare without redistribution.

But the basic payments I envision would not allow people to live opulently. Thus most people would choose to work. Some might choose to invest their monthly checks. Others might wish to defer them so they can enjoy better old age pensions. But the whole character of work would be changed, because people would not work because they have to. They would work because they want to. The socialist dream of the “de-commodification” of labor would be realized.

Sure, some people might choose to spend their time smoking dope and strumming guitars. But one of them might be the next Goethe or Wagner. And surely we would be better off extending the adolescences of a million bohemians than supporting a thousand scheming Wolfowitzes, Madoffs, and Shylocks along with all their warmonger and pornmonger cousins.

“But this system would create public debt!” some might object. But I am talking about creating money, not borrowing it. Why should the government allow banks to create money and then loan it, at interest, to the government, when the government can create money itself? The very existence of public debt goes back to the time when money was something of intrinsic value (like gold) that banks might possess and that the government could not just make up. A government that can simply create money has no need of public debt.

“But this system will create idleness!” is another objection. Yes, but there is nothing wrong with idleness. In fact, as I see it, the whole point of social and technological progress is to create a world in which machines put us all out of work. The goal of social policy should be to create conditions of ever-increasing productivity through scientific and technological progress.

But it would be ecologically irresponsible, indeed catastrophic, if people were to take the gains of increased productivity in the form of more consumer goods or burgeoning population growth. Thus the goal of social policy should be to keep consumption roughly stable and cash out productivity gains in terms of ever-shorter work weeks. As productivity increases, it might be possible to maintain a comfortable standard of living with 20 hours of work per week, then 10, then 5, then 1.

When the work week approaches zero hours, we would be living in a “Star Trek” economy in which scarcity of physical goods is abolished through the invention of unlimited cheap and clean energy sources and the “replicator” which can turn energy into any desired good, simply poofing it into existence. In such a world, the only scarcity would be ecological carrying capacity, which would have to be zealously guarded by keeping populations in check—or sending them out to colonize the stars, terraform dead planets, create galactic empires, etc.

But what to would people do with their leisure? Such a society would be the culmination (and, I would argue, following Hegel, the hidden inner purpose) of all human striving, from the moment man first differentiated himself from the animal and stepped into history. It would obviously be a farce if mankind struggled for millennia only to give birth to a world of indolent, empowered morons. Imagine Homer Simpson poofing donuts and Duff into existence while watching holoporn until he becomes one of the boneless blobs in hoverchairs depicted in Wall-E. Utopia would be wasted on such people. Thus along with scientific, technological, and social progress, we would also need to pursue cultural, spiritual, and genetic progress to create a race worthy of utopia.

A job is just something you do to make money so you can do the things you really enjoy. A job is just a means to doing things that are ends in themselves. Once machines put us out of work and the lollygaggers and lotus-eaters are bred out of the gene pool, people can busy themselves doing the things they find intrinsically rewarding: raising children, writing books, playing and composing music, writing software, inventing machines, playing sports, tending gardens, perfecting recipes, advancing science, fighting for justice, exploring the cosmos, etc.

It will be a realm of freedom in which the human potential to create beauty, do good, and experience joy will be unhampered by economic necessity.

This is the stuff of science fiction and other utopias, staples of the American imagination. Yet the dominant political paradigm in America and the rest of the white world is profoundly regressive and dysgenic. While whites dream of the Space Age, our system is headed toward to the Stone Age, worshiping Negroes as heroes and gods (Morgan Freeman has been typecast as God) and placing a product of dysgenic miscegenation in the highest office of the land.

If we are to resume the path to the stars, we will have to begin by addressing four principal evils: dysgenics, economic globalization, racial diversity (including non-white immigration), and finance capitalism.

What do we call this alternative economic paradigm? Ultimately, I would call it National Socialism. But the little florilegium of economic heresies I have assembled above is drawn primarily from the Social Credit ideas of Clifford Hugh Douglas (1859–1952) and Alfred Richard Orage (1873–1934), partly by way of Alan Watts, who was my first introduction to these ideas, and Ezra Pound, who is the most famous exponent of Social Credit.

It is my conviction that the North American New Right, if it is to provide a genuine alternative to the existing system, must break with all forms of “free market” economic orthodoxy and work to recover and develop the rich array of Third Way economic theories, including Social Credit, Distributism, Guild Socialism, Corporatism, and Populism. This essay and others, including ones to come, are my naïve attempts to start a conversation in the hope that it might draw in other writers who are more qualified to construct a critique of capitalist orthodoxy.

Creating an ideal world will cost us, and our enemies, a great deal in real terms. But the first step toward freedom, namely the act of imagining it, is free.

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61 Comments

For those who need a deeper reading and understanding on the reality of money creation I would like to recommend the following excellent book.
‘The Grip of Death’ by Michael Rowbotham, (Jon Carpenter Publishing, 4th ed 2009).

If everybody gets money for free from the government and nobody works anymore then that would mean the immediate collapse of society due to the absence of goods and services. If only part of the population works while the other part doesn’t, then that would mean that the idle would parasitize on the diligent (and in a multi-racial society, guess WHO would be idle and WHO would be diligent?).

The correct system is: the government prints money and pays it for WORK done for the government (by its officials, policemen, soldiers etc.). Thus money enters into circulation. If that is not enough,the government can start usefull PUBLIC WORKS for which it pays. If that is still not enough it can lend money for a small interest (say 2%). Saving money in the (state) bank should yield the same interest. The Nazis did this and it was an immediate success.

Money should represent real PRODUCTS (goods or services) otherwise it is a swindle. Your “workless” Utopia is as illusory as the perpetuum mobile. You cannot “get” something without “giving” something in exchange. Life is work, not idleness (even the ants understand that, so why not humans?).

You need to re-read the article again. The workless utopia is the end state of technological progress that creates machines to do all the work. The monetary reforms I propose are merely part of what it would take to get there, along with scientific, technological, cultural, and eugenic progress.

A great vision! Working for money is mostly a soul-killing waste of time. My own utopia is a modern version of ancient Greece (but with machines instead of slaves) where the citizens occupy their time with intellectual matters, sports and socializing. Can you recommend a book which gives a simple introduction the theory of social credit?

Traditionalists tend to shy away from matters economic because they either find the topic bewildering or they are loathe to enter into a realm that smacks of materialist concern. Any talk of building a better future for our people is pointless if we do not first secede from the current dominant financial system. By the way, they’ll kill you for trying to do this – just ask Saddam and Muammar.

I would be careful about leaving the creation of money in the hands of government officials “accountable to the public.” As we know, the public will very quickly demand, from their elected officials, more than the planet can responsibly deliver, ecologically speaking. In my mind the creation of money has to go hand in hand with the creation of a new, meritorious, nobility. But yes, it is fun to imagine all the doors that can open once you’ve acquired the ability to create money. You could buy up the newspapers with the widest rates of circulation. You could fund TV studios and produce films that would hypnotize the people of the world into worshiping you. You could build skyscrapers. You could buy politicians and effectively control government. And you could control all public education from preschool to the graduate level, thus perpetuating obedience to your system of money worship and labor.

re: “It is my conviction that the North American New Right…must break with all forms of ‘free market’ economic orthodoxy and work to recover and develop the rich array of Third Way economic theories, including Social Credit, Distributism, Guild Socialism, Corporatism, and Populism.”

Laissez faire capitalism certainly beats socialism at production of material goods, but neglects any values other than maximizing the GDP. I am willing to pay more for vegetables picked by, and manufactured products made by, Americans earning a living wage. Until the vegetables can be picked, and the factories run, by robots built, controlled, and owned by us, at which time we might only need to work 4 hours a day, and we can spend the rest of the time with our kids or reading counter-currents.

From my reading, Greg isn’t proposing the elimination of free economic activity. Those who want more than a bare subsistence could work for additional income. A mostly free market, with some limitations such as protectionism instead of free trade, would surely be more efficient than a complete planned economy, both at producing more, and perhaps more importantly at producing what people want rather than what a central planner thinks they should have, and I suppose that would be the system under which the ambitious citizens would work.

“Corporatism” means seeing the Nation as a body, and making policies that will benefit the whole nation. The term is misused to describe our current corrupt oligarchy in which the government is owned by, and acts for the good of favored corporations such as Goldman-Sachs and General Electric.

The particular form of socialism that Igor Shafarevich examines in The Socialist Phenomenon has nothing to do with third way economics. In Shafarevich’s view, socialism is fundamentally and intrinsically hostile to inequality, religion, private property, the family, and individuality. This is not the case with third way economics, with which Shafarevich appears to be sympathetic (he once wrote an article characterizing Soviet communism and Western liberalism as “two roads to the same abyss”).

I think third way economics should be concerned with establishing equity rather than equality through the abolition of privilege.

Yes, there is something wrong with idleness. We were designed to work physically and mentally according to our talents. “Tending” a garden (in Eden)? No – we need to grow food. Also, if there is a way to construct houses without skilled people making it happen, I’d like to know what it is. Doing the basics for ourselves has always been the foundation of any decent, stable society.

“Path to the stars” is attainable by recognizing our own biology. First things first.

I agree that we are designed to work physically and mentally according to our own talents. But most of what people call “work” is merely a painful chore that has little to do with their innate talents, which is undertaken merely to make money. That is the sort of work that should be done by machines, to liberate us to do the work that we find intrinsically satisfying.

Has there ever been a society anywhere, at any time in history, in which virtually everyone did what they were well suited to? I think there was, and it’s called precivilization. This beautiful situation cannot exist in large cities. Or any size city, if it comes to that. That’s well and good to have “machines” do the shtwork, I’m all for that. But humans have to maintain such complex devices and then you go downhill from there, back to excessive specialization and its dissatisfactions.

This joint we are in is a gaol, we are in a fallen state and don’t laugh just because it’s evangelicals who say that. It just means that every time you solve one problem over here, you create another over there. And round ‘n’ round. I’m not making fun of you for your aristocratic ideas; I love dreamers, we have to nurture them, they/you have a place, too. Just not sure of your conclusions and thanx for listening, Gregory.

Seems to me that most or at least much of humanity is so perpetually ‘messy’ that machines will never fully dominate the service landscape, especially not in a mixed society. Consider the fate of hand driers in public restrooms. In white areas they will be clean and functional, in non-white areas invariably defunct.

I am thankful for the seamy side of life that will forever ensure that we never live in a machine-mediated ecoparadise where all one has to do is sip meerschaum and translate minutiae from Ernst Juenger’s journals.

In the end all this armchair social planning is little more than a mirror of our personalities. I would suffocate in Greg’s utopia; he would wilt in mine.

dysgenic miscegenation says it all. Even when Ron Paul is elected to the presidency and the new currency is issued http://www.youtube.com/watch?v=bP1olToQwOs&feature=player_embedded there is still the problem of civility. In a closed system, with our own culture, I am quite confident that mere financial bookkeeping issues can easily be resolved. However, in this global system of ours the best bet these days seems to be to get some silver eagles which can neither deflate to zero nor be inflated to oblivion. But I am just one of those workers scratching around as best he can.

So lets see, private Bank’s creating money out of nothing and increasing the money supply is bad, however, public government creating money out of nothing and increasing the money supply is a positive good and will lead to widespread prosperity and no negative side affects.

The problem of fractional reserve banking and the manipulation of the money supply can be easily solved much the same way that Greg mentions in the article simply pass a law forbidding Bank’s from lending more than what has been deposited by savers, forcing Bank’s simply to act as brokers between savers and borrowers rather than engaging in monetary counterfitting. This will help prevent boom and bust in the trade cycle. This a far sounder idea than the crazy idea that economic scarcity can somehow be elimited through hyper-inflation.

There is nothing wrong with money creation per se. The question is merely who does it and what are the social consequences of the different approaches. I recommend that the state, which is supposed to look out for the common good and ends up bailing out the banks when economic crises happen, should create money and give it directly to individuals, crafting their policy to serve the common good. This approach injects money into the system without the necessity of paying back principal and interest which gives banks a permanent mulct on the productive economy merely for providing money which is free to them and should be free to all.

A good introduction as to what is possible if we reject the false dualities of the status quo, and ask all questions in light of the One Question that drives us at the social level, “What is best for the Race, and why?”

It would seem Greg is hitting on the economic equivalent of the Singularity.

Let’s take a moment, and work some of this back. Today, we live in an economy where, for very little money, we can live like the kings of a century ago. Municipal water and electricity – social and economic advances, those – have made it possible for someone who accepts Voluntary Simplicity as a lifestyle to live very well, comparatively speaking, on comparatively little money.

As for the social issues around money and banking, Ellen Brown had been working towards an internal framework for such issues. The publicly owned Bank of North Dakota is used as an example more and more by states seeking a way out of their present dilemmas.

The head of the Robotics lab at MIT recently stated that EIGHTY percent of the people working can be replaced by machines. Think THAT one over, Useless Eaters! Automation of agriculture is finally taking place, on a scale that will make France – a world leader in industrial agriculture – tremble with envy. This will be expanded to all economic endeavors, laying the groundwork for a new social order. Buckminster Fuller, in particular, described this issue of economic development. Of course, this could easily turn into “Brave New World.” Indeed, it already is.

Envy – the most universal and corrosive of emotions – remains a factor to be dealt with, one way or another. In effect, living on welfare in the American economy is the functional equivalent of an economic Singularity, for the mestizo underclass of Mexico. What is to be done?

The transhuman movement will grow in importance, I think, until the Elite have bred their Children to be beyond what we would see as “human, all too human.” I suspect they are working on just this, just now, in China, with this knowledge gradually being offered to the Elite who truly rule the world.

I suspect a tremendous reset of the economic system will take place in the next few years, and it will be shocking beyond imagination. At a rough guess, purely back of the envelope stuff, assume the present standard of living will be cut in, say, half. For openers. As well, assume a new currency that returns to the dual currencies of yesteryear, with a (digital) vengeance. The old currency system used gold to trade between nations, and silver to trade within nations. You can imagine the gold/silver price ratio was very important. Something like that might be on the horizon; a gold plus a basket of regional resources back currency, and a quasi-gold standard for internal activities. It’s is important to remember that currency is a medium of exchange – one of many, in an age of electronic barter systems – and a store of value, however transient that value may be.

One example: the Northwest Republic could barter its infinite clean hydroelectric power for teh steel mills used to make the steel for the Northwest Republic. In turn, the Republics Economic Commission would move up the value-added chain by refining the steel to ally steel, with greater properties than ordinary steel. In turn, this could be bartered to an Alberta oil pipeline company, using our pipelines to move their petroleum across the region. What currency are we using? As many as we need, made up as we need them.

And, to the transhumans whose foundations are being discovered in China’s genetic labs, even as we speak, it will not matter. It is all a matter of that firstmost of all things, our Selves and our Values.

An inspired essay. Succinctly elaborates the proper approach to money and finance.

On the issue of money expiring after a spell (recall Silvio Gesell’s statement in THE NATURAL ECONOMIC ORDER that “money must be allowed to rust” and Pound’s advocacy of “stamp scrip”) I’m confused about something.

As a note approaches it’s expiry, and it becomes a hot potato that everyone passes along as quickly as possible; doesn’t someone ultimately get stuck with it in the end, and, as in a game of musical chairs, isn’t that person forced to incur a loss? This is the point about stamp scrip I don’t fully understand. Can you explain this to me Greg?

That’s a good question. When airlines put expiration dates on their mileage points, the purpose is to make people use them or lose them. And the more people who lose them, the better for the airline. But the whole reason for money that expires is to discourage hoarding and keeping money out of circulation. If a bill is coming to the end of its life, the person who has it should not lose its value, which would be contrary to the overall purpose of the scheme. The simplest solution is for people who have such notes to go to the state bank and turn them in for fresh ones. To avoid a situation with circulating hoarders, perhaps one would have to charge a small exchange fee, so there would be no benefit to simply holding bills until they expire. So yes, in the end, some people will be stuck with hot potatoes, but they won’t be so hot that they get burned.

A good post Greg. Perhaps the penny will begin to drop as to the magic of fiat money in a fully productive society before the ‘Paultards’ blind all with their nonsense about gold and ‘Markets’.

The problem with a Social Credit system today (meaning the dividend) is that people in the West have become too soft and been ruined in ten thousand different ways: but have no fear, for the late Dr Soddy has provided the corrective (no dividend) remedy for our economic ills.

The Chinese, who in general, are more disciplined than the couch loving potatoes of the West, are about to implement a system of Social Credit for the benefit of their own people now that they have stolen our patents and have control of super production..

How predictable that there is some seriously muddle-headed thinking in critiquing the essay, in assuming that state credit creation is akin to socialism of a Marxian kind, or that an alternative to usury will make people lazy instead of unleashing repressed creative potential, etc.
The establishment of a new banking system must be the predicate upon which all else follows, otherwise the state will never have the authority or wherewithal to pursue a sovereign policy.
Thinking that credit creation leads to inflation is a typical red herring. State credit was used to fund the iconic state housing public works program in New Zelaand during the 1930s, and this one program eliminated 75% of the unemployment. There was no inflation.
Japan operated such a system as did – in the past – Germany, Canada, Australia, and Guernsey Island has had such a system since the 19th cenutry.
Of course there is a difference between the state creating credit and the private sector: the first would return credit as a means of exchange eliminating usurous debt, the second – as Greg points out – issues credit as a commodity.
As to cogent descriptions of banking reform, there are:
The Social Credit Secretariat
The booklets written by Australian Social Crediter Eric Butler of the League of Rights
The Pilgrims of St Michael based in Canada
Booklets by Ezra Pound

I have one small point to add. When we discuss if it is the state or private banks who ought to create the public money supply, we must look at *why* banks create money. By a large margin, the largest single portfolio of assets within a bank (and here I’m not including the shadow banking system of smoke, mirrors and impending doom) is mortgage debt (Michael Hudson writes about this frequently). A bank will not loan to increase productivity. A bank loans against a fixed asset, most typically a house. This has a strongly deleterious impact on the economy as directing hoards of capital to one asset class appreciates the value of that asset class to absorb all the available capital (see student loans and tuition for another example). Thus, a middle class guy like I has to pay hundreds and hundreds of thousands of dollars for a house that should cost a fraction of present value. This diminishes my disposable income and appreciates bank profit (higher prices = larger loans = more interest = more profit).

A public banking system within a social credit system (merchant banks offering loans for productive enterprises) would both 1) increase the money supply and 2) increase the total productive capacity of the economy, thus limiting the inflationary effects. For best results, a flat fee ought to be applied and not interest. Interest is the devil. Fellas, we win if we remove interest. Should we ever earn our own homeland, the application of interest must be punished by immediate death (after a fair trial, of course).

Another benefit of removing interest is that all prices will fall. Interest is built into the cost of everything. Margrit Kennedy, a German economist, has though her research demonstrated that (in Germany) 77% of rent paid is interest and about 25% of the cost of food is interest. Further, under social credit we can remove virtually all taxation, thereby diminishing prices even further (the layers of taxes form a large component of prices).

Major Douglas was giving instruction to Faggot Keynes in 1930. Keynes gave instruction to Schacht later.

Actually, I think Schacht wrote a book in the 1960’s dealing with his experiences. And, if memory serves, only one person gave “instruction(s) to Schacht.” His system actually worked, as Keynes said it would.

Ellen Brown (Web of Debt) gave full support late in ’10 for Bernanke’s QE2. Of course you already know that. FULL SUPPORT TO THIS UTTERLY ROTTEN JEW ESTABLISHMENT. Yes it’s true.

Ellen Brown, a lawyer, realized those who followed what Bloomberg’s Caroline Baum called the “religion of gold” were following a false path. The most horrific economic event of modern times, the Depression of 1873, occurred in a gold standard world. Something was wrong in 2010, and Brown realized the alternative to QE2 was an financial/economic implosion that would reduce the standard of living dramatically, perhaps on a part with the Mexican Devaluation of 1993.

Brown has moved on, and seems more willing to accept the principles of social credit, certainly in part, by advocating for State banks along the lines of the Bank of North Dakota.

I am not supporting her blindly. I am supporting her intellectual honesty.

You go establish your statist paradise without us. When it fails, don’t ask for help.

“Statist paradise?”

The issue in (falsely defined) Randian terms notwithstanding, is what is the best system of government for the Race. I would argue that the best System remains the Northwest Republic as defined by Harold Covington, because it starts with the stated purpose of the government being the defense of the Race, in support of the further development of the Race.

The misleading term “statist,” which has nothing to do with the discussion, ignores the fact that there is ALWAYS a State. The issue is, “Who rules, and why?” Libertardians would willingly, simplistically, place us under the Iron Heel of Corporatism. “Conservatives” already have.

What is left is the need for a system of governance created to serve the highest and best interests of the Race, and an economic system that does no less.

And, if you want to discuss the topic of this thread in this thread, please feel free to do so. It would make a welcome change, in an “(golden!) apple-pie, strictly legal, sort of way.” (HT: Jim Giles)

In April 1930, Major Douglas was interviewed by the ‘Macmillan Committee of Finance and Industry’ of which Keynes was but one of thirteen members present.

It was in this function that Keynes asked Douglas to clarify his A +B theorem – It was NOTHING MORE THAN THAT.

As far as Keynsian economics is concerned: well Keynes died in 1946 and so can’t really be held responsible for what corrupt politicians and corrupt economists have done in his name: however, it should be recorded that Keynes said that in the long term, deficit spending could only work if the money was issued into the economy interest free and not as it has been, as an interest bearing (national) debt.

I think it was in Arthur Swan’s ”The Other Road to Serfdom” that I saw the following or similar observation in regard to Keynes and Keynesian economics: ”Blessed is the prophet who lacks for disciples”.

This is the best article I’ve read so far this year. Social Credit, or something very like it, not only would remove one of the uberparasites’ power bases, but a skilful promotion of it could even cause a few neurons to fire in the brains of the blankos.

It seems to me, though, that it cannot work without its being managed by honest, honorable men. This is not the sort of men we have in Washington now, or will have in the foreseeable future. That may be an insurmountable obstacle, barring the possibility that the run-up to Social Credit is a revolution and the rise of an entirely new leadership caste, which by the law of averages alone would have to be less corrupt than the current blood-soaked vipers.

It also seems to me that hoarding would not be a problem if saving is largely done by investing in stocks and in 100%-reserve-requirement Savings-and-Loan-type institutions.

Keeping the value of the currency constant should be a major goal. Anything else is inconsistent with honor and integrity, and would punish honest savers or honest lenders while rewarding speculators. A dollar (or maybe a Pound, in honor of Ezra!) should be no different than an inch or a mile — it should not change from week to week or year to year. People should be able to depend upon its value absolutely. A stable unit of exchange shouldn’t inhibit economic activity, though it wouldn’t artificially stimulate it either, and some people would hate that.

The High Council that controls the creation of money should first calculate what degree of money creation (or, in times of decreasing productivity or population — a rarity — what degree of money cancellation) is consistent with zero inflation and zero deflation during the coming year, to the best of their ability. Money should then be created and spent into circulation for all needful and constitutional public purposes. If more money beyond that sum must be created (and history shows that this will be the case almost all the time), it should be issued as a social dividend. In rare cases, taxation would be needed instead of a dividend — in years where the need for created funds is slight.

I fear that this most excellent of systems would be a farcical failure on a massive scale if administered by anything resembling popular glad-handing politicians or the raging egotists who cling like leeches to our pre-revolutionary movement, though. What are needed are the same kind of men that William Pierce sought, but too seldom found, for his Alliance: Men who view their leadership roles as positions in a holy order.

Thank you. I love the suggestion of the New Pound, named for Ezra! The New Pound will be a pure product of poiesis, statecraft to be specific, “backed” by nothing but what you can buy with it, including gold and silver, if you have need of shiny baubles.

I also agree regarding the necessity of a leadership caste that regards their function as a sacred duty. Americans especially are so deeply brainwashed with Marxist and pre-Marxist (classical liberal & low church Protestant) propaganda that we have trouble conceiving such leadership, although historically speaking, European civilization has been blessed with an astonishing record of highly idealistic and far-sighted political leadership: from the Catholic church, the old monarchies and aristocracies, the old republics, and even various guilds and civil services.

Many Americans who dream of a racially-organized state still cling to ideas of government and economics that are fundamentally distrustful of the state and naively trusting in the beneficence of selfishness and capitalism. We have a long process of education — political, economic, philosophical, and historical — ahead of us.

What are needed are the same kind of men that William Pierce sought, but too seldom found, for his Alliance: Men who view their leadership roles as positions in a holy order.

Greg Johnson addressed this critically important issue:

I also agree regarding the necessity of a leadership caste that regards their function as a sacred duty. Americans especially are so deeply brainwashed with Marxist and pre-Marxist (classical liberal & low church Protestant) propaganda that we have trouble conceiving such leadership, although historically speaking, European civilization has been blessed with an astonishing record of highly idealistic and far-sighted political leadership: from the Catholic church, the old monarchies and aristocracies, the old republics, and even various guilds and civil services.

Such an Order- and remember, I have spoken respectfully of the masterful organizational opportunities available in a religious corporation following the model of the Roman Catholic Church – would need to be complemented by other organizations. The White Book of the Northwest Front offers useful ideas for developing the political foundation for such groups at a very local level – kind of like the Nests of Codreanu.

An entire parallel political system can be developed in broad daylight, as Paul Weyrich suggested, and William S. Lind discussed.

All, of course, being done in an “apple-pie, strictly legal, sort of way,” to support all of our activities, which are done, of course, in an “apple-pie, strictly legal, sort of way.” (HT: Jim Giles)

Did I mention sending monthly donations to counter-currents as an excellent place to start? I didn’t? Well, I’ll just take care of that now.

Let me mention my gratification at how wonderful it is to see the clean, clear, intellectual brilliance of Kevin Alfred Strom before us.

in partial reply to Kevin Alfred Strom:

Kevin Alfred Strom in blockquote:

The High Council that controls the creation of money should first calculate what degree of money creation (or, in times of decreasing productivity or population — a rarity — what degree of money cancellation) is consistent with zero inflation and zero deflation during the coming year, to the best of their ability.

Good.

Money should then be created and spent into circulation for all needful and constitutional public purposes. If more money beyond that sum must be created (and history shows that this will be the case almost all the time), it should be issued as a social dividend.

This is not very far from what Buckminster Fuller called for. His issue was the importance of investing in infrastructure that would so increase efficiency as to MORE THAN pay for itself; self-liquidating investments, which would continue to generate economic growth after the debt was liquidated.

In rare cases, taxation would be needed instead of a dividend — in years where the need for created funds is slight.

HOLD THAT THOUGHT!

If memory serves, Beardsley Ruml, former head of Macy’s, former head of the New York Fed, and father of the payroll deduction of taxes, observed that, with the Federal Reserve System, there was no need for an income tax. If memory further serves, he further observed that, in such case, the only need for an income tax was as a tool for social change.

Bingo!

THAT idea died a quiet death, but it does seem to tie into Social Credit, and might be useful.

What legal and economic constraints would there be in place to keep the government from printing too much money and issuing too much credit, the honesty of politicians? the shrewd judgement of the bureacrats? Given that these shrewd bureacrats are tasked with liberating the ‘repressed creative potential’ of the masses which are supposedly denied access to credit for no good reason will they not be tempted to keep drawing from the unlimited supply of paper money that can be printed.

Major Douglas argued that the government should create money on the basis of an estimate of the total capital wealth of the country, but this estimation can only be made in monetary terms. So every time the government prints money the total capital wealth of the country increases (in paper money terms), allowing the government to issue even more money the next quarter and so on leading to ever escalating price increases until the money becomes worthless and the economy collapses.

As regards to monetary creation when money is created out of nothing (or to put it more accurately redeemable to nothing) it is counterfeiting whether a cartel of private banks does it or the state. Money should be redeemable on demand in an actual commodity like gold and the expansion of the money supply should be left to gold miners rather than bankers or the state.

I am proposing taking away the power of banks to create money and giving it to the state. If money creation per se is inflationary, then there is no net increase of inflation on my model.

The state’s ability to determine the right amount of money to create will certainly be no more arbitrary than the decisions of banks, who are looking out only for their short term private gain.

Money is “backed” by whatever people are willing to sell you for it. Why do you feel a need for a second set of goods, a horde in a vault that you can buy at a fixed rate of exchange? That is just a relic of the days when money had intrinsic value. The Social Credit philosophy is to make money fully conventional, fully a matter of fiat, with no intrinsic value, because that is the only way to make money perform its function as a medium, of exchange, to keep it a slave rather than a master.

”Major Douglas argued that the government should create money on the basis of an estimate of the total capital wealth of the country, but this estimation can only be made in monetary terms. So every time the government prints money the total capital wealth of the country increases (in paper money terms), allowing the government to issue even more money the next quarter and so on leading to ever escalating price increases until the money becomes worthless and the economy collapses”

Not so. You completely misunderstand the concept of money and this is where Frederick Soddy is clearer than Douglas: Money is not wealth, it is merely an entitlement to wealth or a legal claim to wealth.

In estimating a nation’s wealth, consideration must be given to what is in hand and what can be produced. This is not unusual as it’s exactly the same exercise that banks conduct when you go to borrow from them, even though they really have nothing to lend: Meaning that you bring the loan into being off the back of your own wealth, which is the only material thing that happens to exist between yourself and the devious banker: whether it be the deeds to your property, in the case of a secured loan, or the simple ‘promise to repay’ from your future earnings as in the case of a small ‘unsecured’ loan that is granted on receipt of your signature.

The nation’s wealth should be estimated following a survey similar in a way to that of the ancient Doomsday Book of England, and then a National bank formed with a 100% reserve based upon the estimate of that survey and the nations potential to produce (goods and services) and its vital needs in general.

Inflation is the result of bank created credit which accounts for 98% of what passes for money today. Government created interest free money (paper and coins) amounts to only 2% of what is circulating, and cannot compete with the creation of bank created credit (debt) which in reality, is a parasite sucking the lifeblood from our people.

Federal Reserve notes are printed by the Bureau of Engraving and Printing (BEP). This is a bureau of the Department of the Treasury, which claims a fee (a type of Seigniorage) for printing them, and the Fed pays this fee of about 4¢ per new note.

It’s true that Fed tells the Department of the Treasury how many notes it wants printed but Congress gave this role to the Fed in 1913, and it could take it away from the Fed tomorrow if it had the balls to do so.

Physical ‘token’ money issued as legal tender is ”based on debt” only in the sense that its function is to extinguish debt on demand and maintain confidence in the circulation of currency. Coins and (like them or not) Federal Reserve notes, which are promissory notes, serve this function. Any circulatory increase of cash merely reflects the general rise in debt which must always be repaid, if demanded by the creditor, in legal tender and not in cheque (Bill of Exchange) or credit card/debit card settlement etc: all of which are not legal tender, and can be refused in settlement of debt.

When you hear that the US Gov is borrowing a trillion dollars for something like Medicare, that doesn’t mean that physical money is being printed and sent from the Fed to the Treasury.

They don’t even bother with that charade: especially when the rate of discount is set at 4¢ per note!

”Money should be redeemable on demand in an actual commodity like gold and the expansion of the money supply should be left to gold miners rather than bankers or the state”

Money is redeemable, and in gold, if that’s what you want to buy with it!

Take $1657 of paper money to a gold dealer today and he’ll give you an ounce of gold in exchange for your ‘worthless’ money’ – The question you should really be asking is why the guys who mine, process, and wholesale the gold are desperate to use it to buy up your ‘worthless’ dollars?

“Take $1657 of paper money to a gold dealer today and he’ll give you an ounce of gold in exchange for your ‘worthless’ money’ – The question you should really be asking is why the guys who mine, process, and wholesale the gold are desperate to use it to buy up your ‘worthless’ dollars?”

Absent legal tender and tax laws which force us all to use the bankers’ or the government’s fiat, miners, refiners, and sellers would use gold, or whatever else they and their trading partners mutually agreed upon as a medium of exchange, just like any other business.

Further random thoughts:

Other than a few industrial and artistic applications, gold has no “intrinsic value.” The value of anything material is imputed. “Value” is an individual human being’s attribution of quality or desirability to something external and probably arises from a complex mix motivations – subjective and rational, conscious and subconscious.

Gold, primarily, and silver, secondarily, have consistently emerged as the currencies of choice over thousands of years because, almost universally, people recognize and are naturally and, I submit, esthetically attracted to them. Gold is difficult, costly, and time-consuming to extract and refine, thereby rendering its supply immune to arbitrary manipulation. It clearly is a form of money which was “earned” at the outset

The notion that government bureaucrats are somehow immune to the sins that private central bankers commit and the notion that any group of men, no matter how noble or intelligent, can successfully tweak the supply and velocity of money for an entire society is just unrealistic.

It would also be unethical to give any coercive entity the power to cause currency units held by private citizens to expire. People need a secure and convenient way to store wealth or purchasing power with which no external authority can interfere.

“Hoarding” – a pejorative term for “saving” – does not harm others. It is a practice which should be encouraged, not vilified. Producing goods and services that other people value, making a profit, and living below one’s means so as to save a portion of one’s profit – these form the foundation for building wealth for the long-term welfare of family and clan and for accumulating capital to invest in other productive ventures. Individual saving promotes general prosperity. We all know that saving or hoarding during the summer was how our ancestors survived the winters. It is in our genes.

Whether indirectly by the convoluted machinations of a usurious private bank with government-given counterfeiting privileges or directly by a state bureaucracy backed by force of arms, the issuance of money left to the an elite body of fallible men, no matter how noble, will lead inexorably to tyranny, as it always does.

@ Formyle:

A provision of Mr. Covington’s draft constitution for a NW Republic is to back its currency with precious metal. Along with his emphasis on the keeping and bearing of arms as the hallmark of free men, he is most definitely on the right track with regards to the importance of sound, tangible money, though I believe he would be wise not to suggest the imposition of legal tender laws on the citizenry in the conduct of their own affairs.

Aryan men do not need government bureaucrats intervening in their personal and commercial business, other than to adjudicate contractual disputes. Let citizens use whatever medium of exchange, unit of account, and store of value that they deem most suitable given their circumstances and resources. Soon enough, a smoothly functioning system – perhaps one based on silver, gold, and platinum group metals – will emerge. Left alone, we can work, prosper, and evolve without having “valueless” self-destructing currency units forced upon us.

On a more general level, why must we concern ourselves with one or another Utopian vision? Why would we want to place all our brothers and sisters under one or another fixed order? Do we not trust the course our evolution and eventual speciation would naturally take us in a setting of freedom?

Hoarding money does harm others, particularly when gold is the standard. Imagine that you are a farmer who takes out a loan in gold to buy farm equipment, and you mortgage your farm to do it. Your loan is denominated in gold coins. Let’s call them Paultards.

You don’t have any problem meeting your first year’s payments. But each subsequent year, it gets harder. Gold, you see, is becoming more expensive. The easily mined gold has already been mined, so with each passing year, the same amount of bullion costs much more to produce in terms of capital expenditure and work. And people who like bits of shiny metal tend to take gold out of circulation every year, thinking that one day it will be worth a lot more when a predicted economic crisis will occur.

So money gets scarcer and scarcer. That means that the a crop that might have brought in 100 Paultards a ten years ago, now bring in 40 Paultards today. But one’s one’s principal and interest do not change. One has to pay 40 Paultards a year for so many years, and when one’s entire crop goes to paying interest and principal, one loses one’s farm and becomes a pauper.

When that happens to enough small farmers and businessmen and homeowners, the nature of society changes. One has just as much “economic” freedom as before, but there is much less real freedom, because more and more people work for big landowners, corporations, etc. and face all sorts of pressures to conform to the opinions of their bosses. Republican government, however, depends upon private property widely distributed and securely held. Preserving republican government therefore requires an economic system that prevents the destruction of the middle class through usury and currency deflation.

If you want to look at the gold standard at work, look at western Europe after 220 AD, when the Romans repudiated the silver denarius and went to a complete gold standard. The deflation and devastation (including the enslavement and enserfment of whole peoples) lasted more than 500 years, until Charlemagne created the pound sterling (literally a pound of silver) as the new monetary unit. Silver being more plentiful and less liable to hoarding than gold, it is less deflationary as a currency.

It might be worth examining Ralph Borsodi’s idea of basing a currency on a basket of commodities rather than just gold or silver. The constant, an alternative currency that was tried out in Exeter and called constant because its value would remain constant, was based upon thirty commodities. There’s more about Borsodi’s ideas on currency at:

In my previous comment, I was thinking more of money as a measure of value rather than as something to be based on commodities, but I failed to make this clear. On this matter, Thomas H. Greco Jr. writes:

“There is an important distinction to be made between using commodities as a standard for defining an accounting unit on the one hand, and using them as a backing for the issuance of a currency on the other. It is not necessary that a currency be redeemable for the specific commodities in which it is denominated. So long as the standard commodities are actively traded, they can provide a benchmark for measuring value. If a currency is properly issued on the basis of goods and services changing hands, it should be able to hold its value at or close to par with the standard unit without redeemability.”

I don’t know whether a composite commodity standard of value would be an effective or an ideal method for defining the value of money, but it looks like something worth examining. At any rate, the value of money should be made as stable as possible. Greco writes: “It seems indisputable that a composite commodity standard of value would provide a much more stable measure than a fixed weight of gold, silver, or any other single commodity. It is true that the market prices of all commodities fluctuate according to the levels of supply and demand, which are influenced by many factors including changing tastes and fashions; new technologies; and weather, civil, and political disturbances. Therefore, the averaging process inherent in a composite standard should provide a closer approach to constancy in value measurement over time than any other conceivable measure.”

Your argument that gold is not subject to arbitrary manipulation is wrong on the face of it. What could be more arbitrary than the supply of gold? It is merely chance that led to the discovery of vast new supplies of gold, for instance the discovery and conquest of the Aztec and Inca empires, or the discovery of gold in South Africa and California. And gold prices rise and fall based on arbitrary political and economic factors. Why should the fate of nations be held hostage to bits of shiny metal?

A government that thinks long-term about the common good is certainly more qualified to determine the money supply than private businessmen who are looking out only for their own interests.

Aryan men do need government to intervene in their personal business when the pursuit of private advantage conflicts with the common good.

The idea that such interventions “inexorably” lead to tyranny is just libertarian hysteria, which is not to be taken seriously in a world in which banks tyrannize over governments and nations and hold our lives hostage to their gambling and manipulation.

‘’Absent legal tender and tax laws which force us all to use the bankers’ or the government’s fiat, miners, refiners, and sellers would use gold, or whatever else they and their trading partners mutually agreed upon as a medium of exchange, just like any other business’’

Andrew,

Legal tender doesn’t force you to use the bankers but it does require, if you demand it, that your debts be paid to you in a currency that is universally accepted. This in turn holds good when it comes to the payment of your own debts and taxes.

You can print your own money just don’t try to copy legal tender. In fact, you can use whatever medium you wish to buy and sell with, so long as the other party is willing to accept your money: It can be in the form gold, silver, wampum, or even the paper stuff that comes with the board game ‘Monopoly’ but when it comes to the free flow of money (which is vital to any society) and the repayment of debt, then protection must be provided. Legal Tender provides that protection and the confidence that comes with it benefits us all.

You said:

‘’Other than a few industrial and artistic applications, gold has no “intrinsic value.” The value of anything material is imputed. “Value” is an individual human being’s attribution of quality or desirability to something external and probably arises from a complex mix motivations – subjective and rational, conscious and subconscious’’

This is correct. You have described gold, in a monetary sense, as a ‘fiat’ currency, the given value of which is dependent upon Human psychology or as H D, McLeod put it: ‘’the mere fiat of Human will’’. And so in essence, you must accept that gold is no different than paper except that gold is scarce whereas paper is abundant, however, money is purchasing power and when purchasing power becomes scarce the economy suffers and people are driven into the hands of the usurers in search of credit to substitute the interest free money that’s being denied to them.

The ideas of the Austrian School, like those of Adam Smith, predate the Industrial Revolution. That’s why the champions of both Schools never fail to mention the currency preferences of long dead peoples who had no idea of the potential of modern power and technology to supply all our needs. The Austrian ideas are primitive and counterproductive to the purpose of a modern economy and should be confined solely to the commercial market place where they can stand or fall according to their merits.

As Soddy points out:

“Economics, in a national sense, is concerned with wealth as what is produced by human beings in order to maintain their lives. Chrematistics, the science of wants and demands and of how they exchange one for another, is quite a distinct study, more plainly termed commerce.”

F. Soddy: ‘Wealth, Virtual Wealth and Debt’, p. 73.

Another point on the scarcity of gold is that the much derided fractional reserve system of lending is actually a product of gold backed economies beginning way back in the days of the Goldsmith.

The myth of convertibility was exposed in Great Britain during August 1914 when, the then most powerful nation in the world revealed it didn’t have enough gold to meet the ‘’promise to pay the bearer the sum of…’’ and quickly ordered the shutters to be pulled down at the Bank of England and the money needed to fight the Great War be printed and put into circulation.

In the US in 1933/4, Roosevelt went even further than the British when he confiscated the gold in private ownership and ceased convertibility except for the settlement of International trade deficits.

In 1933/34 Roosevelt confiscated gold @$20.67 per oz and with one stroke of his magic fiat wand increased its value by almost 75% to $35 per oz – US gold then remained fixed at that price ($35) until Nixon’s action to end the system in 1971/72

Now look at the relative worth of $35.00 from 1933 when applied to a US ‘unskilled wage’ earner in 71.

In 1971 the relative worth of $35.00 (Gold price) from 1933 was:

$109.00 using the Consumer Price Index

$114.00 using the GDP deflator

$267.00 using the value of consumer bundle

$321.00 using the unskilled wage………

It’s plain to see: In 1971 with gold still at $35 per oz, a working man’s dollar could buy him around 10x the amount of gold that his earned dollar would have bought him in 1933 – that’s if he had been allowed to buy gold (US domestic purchase of gold was still forbidden and this restriction wasn’t lifted until Gerald Ford changed things in 1974).

This was bad news for the bullion dealers who had seen the value of their gold destroyed by the rise of America as an Industrial powerhouse that gave its people the opportunity to vastly improve their financial standing in the world – The workers were on the UP and the international hoarders of gold were on the way DOWN!

Similarly woeful in 1971 was gold’s standing against the Consumer Price Index.

What $35 of gold bought in 1933 cost $109 to purchase in 1971 which is 3x more. But $35 dollars of earned income had risen in relative terms to $321: thus buying the worker almost 10x more than an oz of gold and 3x more than his wage did in 1933.

After 38 years the purchasing power of gold in the US had fallen 66% while the purchasing power of earned income had risen 300% – That was real money based on the material output of a great industrial nation, busy going about its business.

Now have a look at the relative worth of $35.00 from 1933 in relation to an unskilled wage in 2010.

In 2010, the relative worth of $35.00 (Gold price) from 1933 was:

$589.00 using the Consumer Price Index

$493.00 using the GDP deflator

$1,650.00 using the unskilled wage…………

In 2010 the average price for an ounce of gold was $1,224 not the $1,650 it needed to be to have its 1933 value against the ‘unskilled wage’ – Gold was still about 25% shy of the value that Roosevelt had inflated into it with his massive hike of 75%. in 1933.

Today Gold is trading at $1657 so let’s admit that it has taken 79 years and the complete destruction of western industry and western society to restore the relative ‘value’ of gold to the $35 that was gifted to it by Roosevelt in 1933.

A provision of Mr. Covington’s draft constitution for a NW Republic is to back its currency with precious metal. Along with his emphasis on the keeping and bearing of arms as the hallmark of free men, he is most definitely on the right track with regards to the importance of sound, tangible money, though I believe he would be wise not to suggest the imposition of legal tender laws on the citizenry in the conduct of their own affairs.

That clause is in the DRAFT Constitution, and is subject to modification. Rightfully so, I might add, as those who purse what Bloomberg’s Carline Baum called “the religion of gold,” place a metal at the center of their economic cosmos. As the REALLY Great Depression of 1873 showed us, this is wrong, and dumb.

My idea has been a basket of commodities backing a currency, and the foremost, highly fungible commodity is what the Northwest Republic could easily produce in abundance, electricity through hydropower.

Note that baskets of commodities with a gold foundation – say, 50 to 75% gold – is being proposed for the regional world currencies. Look at the work on the Arabian dinar, for instance.

In our time, currency is pretty much digital. Backing – the store of value – must be what people, well, value. Gold alone supports crippling deflation, and, for that reason, if nothing else, must be rejected as the backing commodity of the currency. Electrical power, on the other hands, can only be stored for a short while, and is the necessary precondition for a humane economy. Look in the early Twentieth Century; the British economy had gold, a static resource. We were moving full speed ahead with fractional horsepower motors for our industrial economy.

We never looked back.

Let them stare at their stockpiles of gold, which they exchange for our manufactured goods. Then, they have no gold, no store of value, while our economy keeps moving forward, defining currencies in the digital realm.

Aryan men do not need government bureaucrats intervening in their personal and commercial business, other than to adjudicate contractual disputes.

Classic libertardian analysis. As Adam Smith noted, the first things businessmen do is coludea against us, and get the government on their side. We need “government bureaucrats” to help create the public goods the private sector will never develop on its own, such as roads, railways, airports and air traffic control systems, nuclear energy…

Let citizens use whatever medium of exchange, unit of account, and store of value that they deem most suitable given their circumstances and resources.

They do this anyway. They do this in a much more efficient marketplace, on craigslist, and they do this through electronic barter networks. At a certain level of complexity, a national currency is necessary. Below that, this country is so prosperous that people give away their excess goods through the freecycle section of craigslist. That would be no less true of the Northwest Republic.

Soon enough, a smoothly functioning system – perhaps one based on silver, gold, and platinum group metals – will emerge. Left alone, we can work, prosper, and evolve without having “valueless” self-destructing currency units forced upon us.

“Value” is highly subjective; indeed, it is mostly a function of perception, often shaped by culture. However, look at my choice for the foundational store of value for a currency. Everyone uses electricity, and will use more, as they become more prosperous. My currency actually becomes more valuable as more of it is used! The point of diminishing marginal returns is pretty well up the demand curve. Will they use more gold, silver, platinum? Not likely, because they would not need to.

On a more general level, why must we concern ourselves with one or another Utopian vision? Why would we want to place all our brothers and sisters under one or another fixed order? Do we not trust the course our evolution and eventual speciation would naturally take us in a setting of freedom?

We all try to live in Utopia, as much as possible. The best vision for Utopia is one that puts the Race first. Remember, if we don’t develop a System, someone else will gladly have us live under theirs, with them, their values, their goals, their dreams, in command.

Of us.

I want to JOIN with my brothers and sisters in a better Order, and whatever it takes to “fix” things long enough so that can come to fruition, so be it.

Finally, “freedom” is a wonderful term that puts people to sleep. We all have the “freedom” to make choices. We also have the responsibility to live with the outcomes of those choices.

I would much rather make those choices in a Racial Homeland, a Northwest Republic.

There seems to be confusion in regard to ‘money’ as in printing notes and minting coins, and credit. The amount of coins and notes in circulation is minuscule in comparison to the credit issue, which is a ledger keeping exercise. Therefore, there is often a misconception that social credit or state credit would result in the innundation of banknotes, as in Weimer Germany. That is not how social credit and other schemes for banking reform operate.

As for a gold or silver standard: why? The only legitimate standard for credit and currency issue should be a work standard. Money and credit are supposed to a convenient means of exchanging commodities, among other things, not commodities themselves. It is halfwitted to raise objections to a system that has, under various names, worked efficently, without inflation and caused prosperity to states while others languished in depression. It is also useless to argue the efficacy of a system that ensures a discrepency between goods produced and the ability to consume them, which Douglas explained as the A + B Theorem.

Read: Social Credit: An Impact, and What is Money For? by Ezra Pound.
Material by Maj. C H Douglas and Eric D Butler can be found on the internet. The Pilgrims of St Michael is also an excellent source, as is the Social Credit Secretariat.

”Inflation is not caused by increasing the fiduciary circulation. It begins on the day when the purchaser is obliged to pay, for the same goods, a higher sum than that asked the day before. At that point, one must intervene.

Even to Schacht, I had to begin by explaining this elementary truth: that the essential cause of the stability of our currency was to be sought for in our concentration camps. The currency remains stable when the speculators are put under lock and key.

I also had to make Schacht understand that excess profits must be removed from economic circulation. I do not entertain the illusion that I can pay for everything out of my available funds.

Simply, I’ve read a lot, and I’ve known how to profit by the experience of events in the past.[….] All these things are simple and natural. The only thing is, one mustn’t let the Jew stick his nose in.

The basis of Jewish commercial policy is to make matters incomprehensible for a normal brain. People go into ecstasies of confidence before the science of the great economists. Anyone who doesn’t understand is taxed with ignorance! At bottom, the only object of all these notions is to throw everything into confusion.

The very simple ideas that happen to be mine have nowadays penetrated into the flesh and blood of millions. Only the professors don’t understand that the value of money depends on the goods behind that money.

One day I received some workers in the great hall at Obersalzberg, to give them an informal lecture on money. The good chaps understood me very well, and rewarded me with a storm
of applause.

To give people money is solely a problem of making paper. The whole question is to know whether the workers are producing goods to match the paper that’s made. If work does not
increase, so that production remains at the same level, the extra money they get won’t enable them to buy more things than they bought before with less money.

Obviously, that theory couldn’t have provided the material for a learned dissertation. For a distinguished economist, the thing is, no matter what you’re talking about, to pour out ideas
in complicated meanderings and to use terms of Sibylline incomprehensibility.”

There have lately been monetary reformers who have worked in the banking profession, who only came to understand finance and banking AFTER leaving.

One recent New Zealand Minister of Finance, Dr Michael Cullen, who held the portfolio under the previous Labour Government, thought (or claimed to think?) that the money supply is based on savings bank deposits!

Perhaps the only times in history where banking has been put on a sound footing are when professional economists are NOT given the run of things. Look at who founded and funds the London School of Economics, for exaple: Cassel, Rothschild, Rockefeller.